BUSINESS IN BRIEF 28/12

Foreign direct investment (FDI) inflow to Quang Ninh Province this year has surged by an astonishing 15 times against 2011, according to the provincial government.

In the year to date, Quang Ninh has lured US$412 million of FDI, with a huge contribution of the US$300-million project of Hong Kong’s Texhong Textile Group in Mong Cai City. The project occupies 40 hectares in Hai Yen Industrial Park, consisting of six textile mills with total capacity of nearly 140,000 tons per year.

This impressive result of FDI attraction is attributed to the Quang Ninh investment promotion conference held by the province and the Ministry of Planning and Investment in early this year as well as the establishment of the Quang Ninh investment promotion agency.

In addition, there are a number of large-scale projects underway in the province, such as the road linking Halong City to the Hanoi-Haiphong Expressway, the Halong-Mong Cai Expressway, Van Don International Airport and the Halong City environmental protection project. These projects will be developed on ODA funds or under BOT and BT formats.

With large mineral reserves, Quang Ninh for many years has been dependent on mineral extraction, followed by thermal power and cement. However, exploitation of these resources has badly affected the environment because the technology is still low.

Mining companies do not have long-term plans. They only focus on outputs and ignore the environmental impact.

Therefore, Quang Ninh has changed its growth model, aiming at green growth, in order to minimize the adverse impact on the environment.

The province reaffirmed this orientation at a workshop called “Green growth and measures to attract Japanese investors to Quang Ninh” held in mid-December.

Specifically, Quang Ninh looks to become a modern service and industrial province by 2020, aiming at clean and green industrial production. Moreover, the province will promote the marine sector, laying a solid foundation for rapid development.

The existing industries cannot be eliminated, but Quang Ninh will adopt many measures to reduce environmental pollution and impact on local residents.

Manufacturing, processing and supporting industries are put on top priority of the province. When luring investment into supporting industries, farm produce processing and tourism, Quang Ninh will require investors to be financially capable and apply clean technology.

Furthermore, the province will draw up a plan for environmental protection for the next two or three decades and accordingly make schemes to improve the environment.

At the investment promotion conference in early this year, Quang Ninh and the Japan International Cooperation Agency (JICA) signed an agreement in which JICA will become a consultant for green growth in Quang Ninh.

* The northern province of Quang Ninh will develop three more large tourism centers to create more tourist attractions besides the existing Halong Bay.

Ha Quang Long, director of the provincial Department of Culture, Sports and Tourism, said the Mong Cai – Tra Co area will be developed based on its unique tourism products along with special advantages in terms of the border, shopping and sea resort services.

The Van Don – Co To center will be home to ecological tourism products and high-class resorts and entertainment facilities.

“The new plan has taken in consulting from foreign experts, with a number of tourism services starting to take shape. The shortage of recreational services, sports and shopping areas for travelers like the present Halong will be tackled thoroughly by the plan,” Long told the Daily.

Quang Ninh is seeking ways to call for investors to develop traffic infrastructure, tourism ports, an airport and high-end entertainment and cruise tourism.

Sources from the local tourism department said the province has over 88 facilities providing accommodation services with 12,000 rooms available. There are 84 hotels ranging from one to five star offering 4,700 rooms.

The number of tourism boats in the province is more than 450 units able to carry 16,000 tourists to visit Halong Bay at a time, with over 150 boats staying overnight at the bay.

Quang Ninh has this year welcomed some seven million visitors, a year-on-year rise of about 8.5%, earning total revenue of an estimated VND4 trillion.

Services, origin focus needed in FTA deals

Vietnamese enterprises need to care more about the rule of origin and services to enjoy benefits of the Vietnam-European Union (EU) free trade agreement (FTA), according to an expert.

Speaking to the Daily last Friday, Claudio Dordi, Technical Assistance Team Leader of the European Trade Policy and Investment Support Project (EU-MUTRAP) in Vietnam, said that products Vietnam had strengths in such as garment, footwear and seafood needed an import tax cut in the EU.

However, Vietnam imports most of the raw materials from other countries such as China, which may be the reason for the fact that Vietnamese products do not have enough added value to enjoy tax incentives offered by the EU. Therefore, enterprises in Vietnam need to mention this issue to the Government soon, Dordi said.

Besides, service is also a main issue of FTA negotiations. As EU’s service enterprises have advanced technologies, Vietnamese enterprises should propose some solutions to facilitate EU’s investments in Vietnam and technology transfer.

However, according to Dordi, currently, negotiations of Vietnam lack a close connection between the Government and business associations.

The first Vietnam-EU FTA negotiation round officially kicked off in October and is expected to end in 2014 or 2015. During the period, there will be an average of three to four FTA negotiations taking place in Vietnam or the EU each year.

EU-MUTRAP plans to organize conferences for the Government, Vietnam’s FTA negotiators and enterprises so that the Government can have suitable strategies when negotiating after knowing the capabilities of enterprises.

EU-MUTRAP, which will be conducted from 2012 to 2017, has a total budget of 16.5 million euros, with 15 million euros contributed by the EU and the rest by Vietnam. Agencies, associations, universities and research institutes in Vietnam can send their applications asking for financial support from EU-MUTRAP to increase their capabilities.

EU-MUTRAP has also offered support for economic issues in the EU-Vietnam Partnership and Cooperation Agreement (PCA) such as regulations concerning food hygiene and technical barriers.

In addition to helping Vietnam meet international quality requirements, EU-MUTRAP plans to help Vietnam set up hygiene standards similar to international ones for application to goods imported into Vietnam.

Assoc targets US$1.5 billion cashew export

The Vietnam Cashew Association (Vinacas) at its eighth congress in HCMC last Friday set a target of achieving over US$4 billion in exports in 2013-2015, or US$1.4-1.5 billion annually in the period.

The nation has this year exported 220,000 tons of cashew nuts with a total value of US$1.45 billion. Vietnamese cashew nuts have been shipped to more than 100 markets, with the United States being the largest importer with 35% of total export volume, followed by China with 20%.

To realize the target, Vinacas calls for its members to focus on such traditional markets as the U.S., EU, China, and Australia and to boost exports to the Middle East, Eastern Europe, Northern Asia and ASEAN. The association also proposed the companies closely monitor market movements to respond in a timely way.

To support the members in carrying out the plan, Vinacas has asked for VND43.5 trillion short and medium-term loans to help purchase and import crude cashew in 2013-2015.

The association also urged a lower import tax on unprocessed cashew, at 0.5%, explaining that only half of cashew material for is locally supplied. It even insisted on extending the tax grace period for declaration forms of import crude cashew to six months or one year.

This year has been really difficult for many cashew exporters, with Long An Export Product Processing JSC, a large and experienced company in the industry, posting an accumulated loss of up to VND132.6 billion in January-September. The reason is the firm’s executives had failed to forecast market changes including a sharp fall in prices of cashew nuts.

Vinacas predicts exports of farm produce comprising of cashew will have to face technical barriers to trade erected by importing nations besides suffering weakened demand. These barriers are the Food Safety Modernization Act (FSMA) of the U.S. Food and Drug Administration (FDA), and regulations on import controls and technical barriers by the EU, Australia and China.

This is another challenge for local cashew exporters, so they need to take stricter control on all processes, ranging from purchasing, processing and preserving products and changing technology to meet requirements of such foreign importers.

Vietnamese tourists to Malaysia surge

Despite the tough economic times, the number of Vietnamese tourists traveling abroad, especially to Malaysia, is still surging.

In 2011, only some 170,000 Vietnamese tourists visited Malaysia but this year, the number has grown to around 200,000.

Mohd Akbal Setie, director of the Malaysia Tourism Promotion Board in Vietnam, said Vietnam was an important market, among the top 20 source markets for Malaysia.

Most visitors come to Malaysia on leisure tours. Malaysia is promoting new forms of tourism such as golf tourism and youth tourism targeting Vietnamese visitors.

“We started promoting golf tours in Malaysia to the Vietnamese market last year, and there have been some pretty good feedbacks,” said Setie at a presentation on golf tourism to Vietnamese travel companies and golfers held in HCMC last Saturday. In addition, the Malaysia Tourism Promotion Board introduced a program dedicated to young people.

Several entrepreneurs attending the event said the number of Vietnamese golfers going to Malaysia for this activity was rising.

“We recently organized a golf tour for nine people in Malaysia from December 17 to 19. In January, there will be one group of 30 people and one group of eight. Customers have started to show interest in this kind of tour apart from pure leisure tours,” said Nguyen Minh Tuan, marketing director of Premium Travel Company.

There are now some 200 golf courses in Malaysia, according to the Malaysia Tourism Promotion Board.

HCM City wants loosened visa policy to attract tourists

HCMC has worked out some propo sals concerning visa policy, including offering unilateral visa exemptions for major markets and establishing representative offices in foreign countries.

These proposals will be discussed at the forthcoming meeting of the State Steering Committee for Tourism.

Specifically, to attract tourists from major markets, Vietnam needs to improve the visa policy for international tourists.

In addition to issues concerning travel management, accommodation and tour guides, HCMC also suggests setting up tourism representative offices in important markets like the U.S., western Europe, Japan and South Korea to effectively promote tourism images of destinations in Vietnam.

Besides, there should be incentive tax policies for over-30-seat vehicles transporting tourists to encourage investment in high-quality vehicle fleets for tourists.

In preparation for the meeting of the State Steering Committee for Tourism which will be held in the near future, the Ministry of Culture, Sports and Tourism has organized meetings with enterprises in HCMC, Danang and Hanoi to collect their opinions and suggestions.

At the meeting in HCMC, the ministry mentioned a new travel stimulus program and called for participation of enterprises nationwide, aiming to attract more tourists in 2013 when tourism is forecast to remain in difficulty.

According to the HCMC Department of Culture, Sports and Tourism, the number of international tourists coming to HCMC this year is estimated to be around 3.8 million, rising by 10% year-on-year and accounting for 55% of the country’s total number. Besides, the city’s tourism revenue reached some VND65 trillion this year.

HCM City’s tourism revenues up 20%

HCMC’s tourism sector revenues this year are estimated to reach VND68 trillion, rising 20% from last year and accounting for 40% of the country’s total, according to the HCMC government.

There will be an estimated 3.8 million international tourists coming to the city this year, representing 85% of the total nationwide and surging 8.5% year-on-year.

The city next year will improve the quality of services and diversify tourism products, especially riverway tourism, to attract more local and foreign tourists and contribute to growth in tourist arrivals and revenues.

The HCMC Department of Culture, Sports and Tourism is preparing a development strategy for riverway tourism in the city with a vision towards 2020. The city will firstly formulate a plan until 2015 to develop river routes, tourist attractions, wharves, means of transport and human resources.

New bridge opened to traffic in Saigon South

Him Lam Bridge across the Ong Lon River connecting District 7’s Nguyen Thi Thap Street with Trung Son residential area in Binh Chanh District was opened to traffic last Saturday.

The new bridge makes it easier for residents in the area to move around. The project cost about VND300 billion.

The bridge will also add value to real estate projects in this area, including the Him Lam Riverside project that is being developed by the company. Him Lam Riverside with 134 flats is now offered at around VND29.5 million a square meter.

Mai Linh to sell assets to clear VND500 billion debts

Mai Linh Group will sell a number of its real estate projects, rest stations and old vehicles to settle a total debt of VND500 billion.

The diversified services provider will also undergo restructuring to focus on transportation, said Ho Huy, chairman and CEO of Mai Linh Group. He was speaking last Saturday in response to rumors about Mai Linh’s insolvency.

Huy brushed off the rumors that Mai Linh was withdrawing from the central region via a sale of 3.4 million shares.

He explained an investor had lent Mai Linh VND20 billion mortgaged by shares for six months to a year, not that Mai Linh had sold its shares. The money borrowed is used to prepare Tet bonuses for staff members and pay taxes and social insurance premiums, he said.

In response to the Daily’s question whether Mai Linh is scaling down its taxi operations in other localities to focus on HCMC, Huy said: “Our seven-seat cabs are now operating inefficiently in other provinces, with daily revenue of less than VND1.5 million each, so we bring them back to the city to compete with other firms in the high-end segment.”

“As these cabs are brought back to the city, we send cheap Kia morning four-seat cars to other localities. In fact, the Kia morning cars operate very efficiently there,” he added.

Mai Linh now has some 7,000 shareholders, including major investors like VinaCapital and IndoCapital, together with employees of Mai Linh and local investors. Mai Linh has borrowed VND500 billion in total from 800 individual customers, Huy said.

In regards to the information about Mai Linh’s inability to pay debts, he explained the economic crisis and difficult business situation had resulted in the group’s late debt repayment.

He emphasized Mai Linh was capable of clearing the debt of VND500 billion. However, it cannot be paid off at once but will be repaid bit by bit.

Mai Linh intends to sell its property projects, used cars and rest stations to settle debts.

“Mai Linh is negotiating with investors to extend the repayment period by 1-2 years. As for veterans, retired people and families in urgent need of money for medical treatment, Mai Linh will repay them immediately. Mai Linh will sell the existing property projects, accepting losses of 10-20%. However, as the real estate market is frozen, we have to wait for opportunities,” he said.

Unsold property products of Mai Linh are worth some VND1 trillion, including VND500 billion in the southern region.

In the case the projects could not be sold, Mai Linh would sell old vehicles, which would bring in about VND300 billion. Besides, the group will sell car stations to have money to pay back debts.

In addition, the group will be restructured, and won’t be following the parent-subsidiary model anymore in order to streamline its apparatus. The inefficient Mai Linh Express routes will be eliminated so that Mai Linh can focus on the long north-south route.

“With these solutions, Mai Linh will certainly overcome its difficulties and be able to repay debts to investors. The debt of VND500 billion is not too big for an enterprise like Mai Linh,” Huy stated.

He informed Mai Linh was in talks with local and foreign investors over increasing its chartered capital by some VND1 trillion so that it could settle debts and buy 2,000 new vehicles, especially economy four-seat cars.

Mai Linh Group is active in the field of long-distance passenger and goods transport. Mai Linh now has about 28,000 employees and more than 12,100 vehicles.

In addition to transport, the group has invested in many other sectors such as education, tourism and real estate.

Dai-ichi Vietnam teams up with broker

Dai-ichi Life Insurance Company of Vietnam (DLVN) and Toyota Tsusho Insurance Broker Vietnam Corporation (TTIBV) clinched a cooperation deal in life insurance brokerage over the weekend.

TTIBV under the agreement will introduce products of DLVN while giving consultancy service to its customers. TTIBV will also serve as a broker in offering insurance products to clients, mostly Japanese-invested firms.

The life insurer’s chairman and general director Takashi Fujii said that cooperation with TTIBV is part of its strategy to diversify distribution channels. DLVN has plans to develop selective channels besides the traditional channel via agents.

TTIBV was established in March, 2011 through a joint venture between Toyotsu Insurance Management Corporation and Hanoi-based Toyota Tsusho Vietnam Co. Ltd. In July, 2011, the enterprise won a license from the Ministry of Finance to offer property, accident and life insurance brokerage services to Japanese-invested enterprises.

Many firms fail to pay social insurance

Among enterprises owing social insurance premiums, many are unable to settle arrears with companies in construction, garment, footwear and shipping industries are those owing the highest premiums, the HCMC Social Insurance Agency said.

Specifically, the premium arrears owed by some companies under Mai Linh Group have reached VND40 billion, and five companies have been sued for this.

The garment makers Ilshin Womo and Sea Hwa Vina have owed an amount of VND4.7 billion and VND6.3 billion respectively, while companies under Vietnam Shipbuilding Industry Group (Vinashin) have also failed to pay social insurance premiums.

According to Nguyen Thi Hong Hanh from the HCMC Social Insurance Agency, the premiums owed by enterprises are high due to their deteriorating business and increasing inflation.

The total social insurance premiums owed by enterprises in the January-November period amounted to VND1.45 trillion, up 16.5% from the same period last year, with premium arrears overdue by more than six months increasing from 20% to 35% of the total.

The arrears of medical and unemployment insurance also increased with VND276 billion and VND38.1 billion recorded in the nine-month period, up 27.5% and 47.2% respectively.

Besides, enterprises have still evaded and delayed insurance premium payments as well as given false information about the number of laborers and wages, according to Hanh.

Many enterprises have dissolved, stopped operation or moved to other places, and have evaded their responsibilities to pay social insurance premiums, resulting in an increase in premium arrears which cannot be collected.

Nguyen Thanh opens furniture outlets at home

Binh Duong-based Nguyen Thanh Co. Ltd., a wooden furniture producer that has exported to Europe over the past decade, will spend US$1 million establishing a chain of furniture shops in the local market.

Three furniture shops under the brand name of Nguyen Thanh Furniture have opened in HCMC. They are located at 431 National Highway 13 in Thu Duc District, 117 Nguyen Thi Thap in District 7 and 374 Cong Hoa in Tan Binh District.

From now until December 2013, the company will spend US$1 million setting up seven more outlets, covering 600-800 square meters each, said Nguyen Thanh Binh, director of Nguyen Thanh.

This is the first time Nguyen Thanh has explored the local market. The company hopes its products, which are made of American oak or Vietnamese acacia with European designs and quality, will attract above-average income earners at home.

Since 2002, Nguyen Thanh has been exporting its wooden furniture products to England, Germany and France, among other European countries. The company’s exports brought in US$3 million in 2010, US$4 million in 2011 and US$6 million since early this year.

Power price hike hits steel, cement producers

A 5% spike in the power price effective last Saturday will put more financial burden on steel and cement producers as their input costs are surging while demands for steel and cement are falling sharply.

Speaking with the Daily on Monday, Nguyen Van Thien, chairman of the Vietnam Cement Association, said the power price hike will push up the cement production cost by VND13,000-15,000 a ton.

Therefore, the spike has brought more financial pressure for cement makers since cement demand is tumbling. This means that cement production costs are up but industry insiders have no ways to increase prices of cement accordingly.

Prices of cement products of Ha Tien 1 and Holcim have stayed at VND1.7 million a ton over the past few months, with prices of other cement products fluctuating between VND1.4 million and VND1.7 million a ton, Thien said.

He said the Electricity of Vietnam Group as a monopolistic provider has conditions to revise up the power price, but manufacturers using power are forced to suffer the outcome every time the energy price is pushed up.

“Now the cement industry is mired in troubles, and its production has become stagnant gradually. It is sad that many cement producers are operating at half of capacity while the remaining ones have also scaled down production,” he clarified.

Thien estimated the local cement consumption at about 45 million tons this year, a year-on-year drop of four million tons. It is lucky that cement exports have been improved in recent times, with the 2012 export volume reaching roughly 7.5-8 million tons, a slight rise against last year.

Steel makers also feel the pinch.

Dinh Huy Tam, general secretary of the Vietnam Steel Association, said the power price hike in the current economic difficulties has pushed steel makers into troubles. He reasoned that outlets of the steel industry have remained poor due to the ongoing frozen real estate sector.

Do Duy Thai, general director of Thep Viet Corporation, in an earlier talk with the Daily expressed his concern about the fate of local steel billet producers given the price power rise as they consume much electricity, at an average 600 KWh for a ton of steel billets.

Producing one ton of steel billets in the country costs about US$590 and the sum is equivalent to the import price, he said. When the power price goes up, production costs of the product will be higher than the import price, and the steel industry may see the overwhelming presence of import products in the home market again, which will result in thousands of workers losing their jobs, he stressed.

Many steel billet plants are suffering huge losses owing to weak competitiveness, Thai said, adding the industry will be more exhausted because of the power price rise.

Logistics needs 20,000 more laborers

Logistics and freight forwarding services in Vietnam will need an additional 20,000 laborers in the next three years, said the Vietnam Freight Forwarders Association (VIFFAS).

Speaking at a seminar on human resource development solutions for seaport and logistics held in Vung Tau City last Friday, VIFFAS chairman Do Xuan Quang said there are now about 1,000 logistics firms in Vietnam, but the human resource for this sector is of low quality and insufficient.

Statistics show that around 1.5 million laborers are working in the logistics industry, but only 3% of them have been trained for logistics. These 1.5 million people can only meet 50% of the manpower demand for logistics activities across the country, which is a serious deficiency.

In the next three years, Vietnam will need an additional 20,000 laborers working in the logistics sector and about 30% of the current employees need to be retrained, said Quang.

The Vietnamese logistics industry has been developing for nearly 20 years, contributing 20% to the nation’s annual GDP.

Vietnam ranks 53rd among the 155 nations with the best logistics services worldwide and 5th in Southeast Asia, according to the World Bank. However, Vietnam is one of the four countries in the region, along with Laos, Cambodia and Myanmar, with no training schools specializing in logistics.

Bui Thien Thu, deputy administrator of the Vietnam Maritime Administration, said Vietnam would have to grant logistics certificates to qualified employees in the coming time. In many other countries, all laborers in the logistics sector have logistics certificates.

The Vietnam Maritime Administration is studying and promoting establishment of three centers specializing in logistics human resource training in the North, Central and South. In particular, a center has been developed and put into operation in Haiphong, and two others will go up in Vung Tau City and a central province.

2013: good time for business startups

Despite challenges ahead, experts and entrepreneurs at a seminar in HCMC last Friday believed that 2013 would be a good time to start up a new business.

Speaking at the seminar on next year’s business startup trend organized by the Business Startup Support Center, Vu Minh Tri, general director of Microsoft Vietnam, said players in the information and technology sector should not start up a business alone or with a small group of partners like before.

There are four main technology tendencies in the coming time: mobile, cloud computing, social network and big data. Giants like Microsoft, Google and Amazon have been strongly investing in these sectors, Tri said.

However, there are opportunities for startups as many large enterprises are searching for app providers. For example, Microsoft has built up Window Phone 8 operating system with over 120,000 applications and is receiving hundreds of new applications from providers each day.

Android, the world’s largest operating system developed by Google, has 700,000 applications. However, Apple’s iOS system with 600,000 applications has reported the biggest revenue of US$6.5 billion in January-October, four times higher than Android.

Nguyen Tuan Quynh, vice chairman of HCMC Young Businesspeople Association, said that next year would bring about many opportunities for startups on necessities-related sectors such as garment and textile, food, catering, health and education.

Although 2012 is a tough year with many enterprises, even large ones, having gone bankrupt, experts at the seminar said, there have been a big number of business startups. Many of them have joined the market with nothing but enthusiasm and an idea. Therefore, the ratio of success is not high.

The experts advised that startups should pay attention to other factors like market access and management.

Newly established businesses should have deep knowledge of technology, products, markets and customers; otherwise, the possibility of business failures would be high, said VNG general director Ly Hong Minh.

Vietnam earns $3.44 billion from rice export

Vietnam had exported 7.495 million tonnes of rice for $3.44 billion as of December 20, 2012, according to the Vietnam Food Association (VFA).

VFA said on December 24 that the figure included 398,113 tonnes shipped from December 1-20, which brought home $193.265 million.

In the Mekong Delta region, the country’s largest rice bowl, prices of dried rice is fluctuating between 5,300-VND5,400 per kg and that of long grain, ranging between VND5,500-5,600 per kg.

Vietnam’s rice output for 2012 is expected to reach 43.7 million tonnes, an increase of 1.45 million tonnes over last year’s figure, according to the Ministry of Agriculture and Rural Development.

Schweizer and Meiko join to build printed circuit board line

Schweizer Electronic Singapore, a member of Germany’s Schweizer Electronic AG, will enter a joint venture with Meiko Electronics Hong Kong Company, a member of Japan’s Meiko Electronics Company, to set up production of a printed circuit boards in Vietnam.

“Both companies have agreed to build a common production line for the manufacturing of printed circuit boards dedicated to European customers in the automotive and industry segments. It is planned to produce standard printed circuit boards as well as solutions which reduce the overall cost of a system, such as FR4 Flex, and power electronics solutions, like the Inlay Board,” Schweizer Electronic AG announced in a statement.

The firm said it and Meiko decided to choose Vietnam for the investment plan because “the production will benefit from the favourable economic conditions that Vietnam offers in comparison to other Asian countries.”

This joint venture, which will be headquartered in Hong Kong, is planned to be officially set-up in the beginning of 2013. The production capacity and the total investment capital have not yet been revealed, but the German firm announced the start of production in Vietnam was scheduled for the third quarter 2013.

By joining forces, Schweizer Electronic AG and Meiko aim to build upon their respective market accesses to Europe and Asia, their technology expertise and their production and process know-how in order to offer a wide range of products to global customers.

“Following the foundation of our partnership with Meiko in April 2009, a close and successful cooperation over the past three years and our mutual shareholding, it was a logical step to further build on the valuable experience of two powerful partners,” said Marc Schweizer, chief executive officer of Schweizer Electronic AG, who is also designated vice president of the new joint venture.

Schweizer Electronic AG is a global best-in-class technology company, manufacturing premium PCBs, innovative solutions and services for automotive, solar and industry electronics. Meanwhile, Meiko is a global leading printed circuit boards manufacturer. This Japanese company currently runs a manufacturing factory in Hanoi, which started operation in November 2011 and employs about 1,200 people.

“While Schweizer is a recognised research and development partner in Europe for innovative printed circuit board solutions, particularly for the automotive and industry segments, Meiko is an established enterprise offering volume production mainly for the automotive and mobile industries. Thus we are convinced that our customers will benefit from this strengthened partnership,” Schweizer said.

Automakers eye tax relief

Foreign car-makers are seeking more tax incentives from the Vietnamese government as a condition to increase investments in Vietnam.

At the Vietnam Business Forum (VBF) held in Hanoi early this month, car-makers proposed that the automotive and motorcycle manufacturing be treated as a hi-tech industry with investment incentives as at this time the industry does not enjoy any one under Vietnam’s hi-tech industry development orientations.

“Strong evidence and international studies show that the automotive industry is a key player in technological development within numerous countries. Moreover, the industry’s development is strongly correlated with the development of skills, country’s know-how and ultimately its education system,” VBF’s Automotive Working Group, which was set up for the first time in VBF’s history, said in a statement released at the forum

“The idea will help develop the auto manufacturing industry in Vietnam, especially the supporting industry due to incentives in taxes on materials, technology and entrepreneur turnover,” said Michael Behrens, Mercedes-Benz Vietnam’s general director.

The proposal of car-makers, especially foreign ones, came in the context of a gloomy auto market. Vietnam’s car sales within the first eleven months hit 9,570 units, a 28 per cent decrease compared to the same period of last year, according to the latest report from Vietnam Automobile Manufacturers’ Association.

Although multi-national companies in the automotive sector entered the market nearly two decades ago, the most important parts, such as engines and gearboxes, are imported from branches of parent companies or from foreign suppliers.

Foreign car-makers like Toyota, Honda, Ford, Mitsubishi and General Motors are complaining that high taxes imposed by the Vietnamese government on automotive industry have deterred them from expanding investments in the nation. At present, local assembly kits face an average import tax of 20 per cent, while completely-built unit vehicles bear a 68 per cent -78 per cent import tax.

The Automotive Working Group in the statement said new tax incentives would encourage car-makers to expand in Vietnam, especially in supporting industries. Of paramount importance, automakers say, are investments for certain high value-added components such as engines, engine parts and electrical systems, which would help the transition of the country known for a pure cost base advantage to a more sustainable technological advantage.

Firms still suffering from a crisis in confidence

The business community remains pessimistic about Vietnam’s economic prospects over the coming six months.

The Ministry of Planning and Investment’s National Centre for Socio-Economic Information and Forecast released a survey on “Business Confidence in Vietnam” conducted in 2012’s third quarter involving 901 local and foreign firms in Hanoi, Ho Chi Minh City, central Danang city and northern Bac Giang province.

The survey found that 44.1 per cent of firms said declined consumption was the biggest concern as it would badly affect their investment and business plans in 2013’s first half. Meanwhile, 17.2 per cent said they had no profit to invest in new projects and 14.9 per cent said high costs from loans would prevent them from continuing their business over the next six months.

Moreover, 60 per cent of the surveyed firms said they expected Vietnam’s economic situation to worsen in 2013’s first half than now. Forty-six per cent said they did not see any recovery prospects for the whole 2013, and 35.8 per cent held that the economic picture would become worse than it is now.

Vietnam Chamber of Commerce and Industry (VCCI) chairman Vu Tien Loc said in VCCI’s recent Provincial Competitive Index 2012 (PCI) conducted over nearly 8,200 local private firms and 1,500 foreign firms in 63 cities and provinces, enterprises’ optimism about the economic situation had reduced to 33 per cent, the lowest level since 2005 when VCCI begun conducting PCI. The rate was 47 per cent last year and over 70 per cent in the previous years.

“To win back enterprises’ confidence, it is recommended that the Vietnamese government reduce the corporate income tax from the common level of 25 to 20 per cent. Also, enterprises’ land rentals also need to be trimmed down,” Loc said.

Australian ambassador to Vietnam Hugh Borrowman said Vietnam’s economic development had over the past two years slowed down due to problems related to macroeconomic instabilities, affecting investors’ confidence.

Kim Jung In, general director of investment consulting firm Sein I&D Vietnam and chairman of Korea Chamber of Business in Vietnam, stressed that the speed of administrative procedures in Vietnam was extremely slow.

“Quick processing of administrative procedures not only offers better services to foreign investors but also to citizens of Vietnam, as well as improving their satisfaction on administrative services,” In said.

European Chamber of Commerce chairman Preben Hjortlund said the Vietnamese government should focus on pricing, the role of the state sector and intellectual property right.

“If this is not done, it creates uncertainty for investors and foreign direct investment will remain limited as compared to its potential,” he said.

Bianfishco recasts net wide

Debt-ridden Bianfishco, a major exporter of pangasius fish fillet until 2011 has resumed overseas shipments.

The Can Tho-based company resumed operations in May after closing its pangasius processing factory in the city late February with VND1.5 trillion ($72 million) in debts to banks and supplying farmers. In early August, Saigon Hanoi Bank and Vietnam Development Bank (VDB) signed a cooperation agreement to restructure it, with the former lender guaranteeing payment of the firm’s loans from VDB, and VDB committed to releasing Bianfishco’s mortgaged property.

Then, Saigon Hanoi Bank and the Ministry of Finance’s Debt and Asset Trading Company climbed onboard to co-run Bianfishco. Now that production has become stable again, the firm targets $90 million in export turnover for next year, says a company report submitted to the Can Tho city People’s Committee, which watches over Bianfishco’s restructuring.

Bianfishco resumed production in three plants employing 1,200 workers and processes 100 tonnes of pangasius fish per day. The company has recommenced shipments to established markets like the US, European and Islamic countries. Established buyers including Maak Enterprises, Obaba Seafood, Western United have placed orders again with the firm, said Bianfishco CEO Nguyen Tat Thang, who replaced CEO Tran Van Tri after the two Vietnamese banks got involved in the company’s shake-up.

At that time, Tri’s wife and company founder Pham Thi Dieu Hien, transferred 25 million Bianfishco shares she was holding to Saigon Hanoi Bank for it to hold a 50 per cent stake of the seafood exporter. With the new shareholder, the firm plans to become a publicly traded company over the next three years, with listed shares.

ACE Life Vietnam’s new chairman

ACE Life Insurance Company Limited, known as ACE Life Vietnam, has announced the appointment of its new chairman of the management board.

Lam Hai Tuan, the newly appointed chairman, is concurrently the country president of ACE Life Vietnam, part of the ACE Group of Companies.

“I am proud of the growth of ACE Life Vietnam over the past eight years. With my new appointment, I will continue to lead the company to better serve customers to achieve our vision to be recognised as a leading life insurance company in Vietnam with the highest level of ethics and professionalism,” said Tuan.

In Vietnam, ACE Life offers a comprehensive array of life insurance products through around 10,000 agents and some selected banks.

The company pioneered the introduction of the Universal Life plan to the local market in March 2006 and has since developed a full range of Universal Life products including Critical Illness Universal Life that provides critical illness protection as part of the main plan. This diverse range of Universal Life products enables individuals and groups up to the age of 80 to select plans to suit their financial means.

ACE Group of Companies is one of the world’s largest multiline property and casualty insurers. With operations in 53 countries, ACE provides commercial and personal property and casualty insurance, personal accident and supplemental health insurance, reinsurance and life insurance to a diverse group of clients.

ACE Limited, the parent company of the ACE Group, is listed on the New York Stock Exchange (NYSE: ACE) and is a component of the S&P 500 index. ACE’s core operating insurance companies are rated AA- for financial strength by Standard & Poor’s and A+ by A.M. Best. This rating is indicative of ACE’s strong capital base and financial stability, key attributes in the business of risk.

Big question mark over VIUT project

Ambitious plan for a $3.5 billion Vietnamese International University Township or VIUT in the southern hub of Ho Chi Minh City has shown new signs of progress.

The giant project has been left on papers since it was licenced in 2008 largely due to site clearance obstacles.

Nguyen Van Thanh, chairman of the North-West Metropolitan Area Management Authority said it would timely issue necessary legal documents in relate to land rental and relocation compensation for local residents at the site so as to enable Berjaya Land Berhad, the Malaysian developer of the project to move ahead.

Thanh made the decision after a recent meeting between the authority and Berjaya Land Berhad.
But, he also said that the authority could not give a precise deadline for the issuance of such legal documents as calculating the rentals and compensation costs were complicated due to overlapping current land regulations.

In this context, ground-breaking could still be more several years ahead because of the completion of these calculations and the need for the local authorities and the developer to complete other necessary procedures to secure the site.

Delays in a discouraging economy might be shrugged off by some developers, but Berjaya Vietnam seems frustrated by the process.

Phuong Anh Phat, senior business development manager of Berjaya Vietnam, said the firm did not face financial difficulties and that the firm could construct the project immediately after the authority gave it the land.

According to the initial design, around 100ha land in the 925ha VIUT project would be used for higher education, expected to be most modern universities in South East Asia. After completion, the project would also comprise 20 kindergartens, primary and secondary schools, apartments and townhouses; clubhouses and sport areas, and a 15ha medical care facility.

Phat said that around 300 hectares in the project was expected to construct new public universities replacing old ones in the centre of the city. This will change the main characteristic of the VIUT – a township for international schools, which make it harder for the firm to call for investments from international universities all over the world.

Previously, Berjaya Vietnam announced that the 55ha first phase, which provide around 2,000 apartments and 255 semi-detached houses, would be completed within three years.

“Our project is expected to provide a large number of apartments and semi-detached houses. In the current circumstance, it however would be difficult to sell all of those as the Ho Chi Minh City residential market is forecasted to be in danger of oversupply,” said Phat.

Useful information in Vietnam

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----------------------------------------Hanoi city tours: We pay a visit to the History museum, which displays a lot of objects with high historical values, that gives you a clear insight about Viet Nam’s past.
----------------------------------------Saigon city tours: The tour continues to the Notre Dame cathedral, the Center Post Office and Ben Thanh market – the symbol of Saigon.
----------------------------------------Vietnam Blogs Travel: Useful tips travelling in Vietnam, Vietnam tourism and travel information including facts, maps, history, culture, transport and weather in Vietnam.
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